Welcoming 1 million more foreign graduates could lift South Korea’s GDP by 6%: Study

South Korea could unlock over US$100 billion (S$128.2 billion) in economic value by welcoming one million more skilled foreign graduates, according to new research that emphasises immigration as a possible answer to the country’s shrinking workforce.

The Korea Chamber of Commerce and Industry (KCCI) and a research team led by Korea University economics professor Kim Duk-pa released the findings on Aug 13. They analysed the economic effects of foreign talent using data from all 17 administrative regions of Korea between 2012 and 2023.

The study found that when the share of registered foreign university graduates in the economically active population rises by one percentage point, per capita gross regional domestic product increases by about 0.11 per cent.

As at July, South Korea had a population of 51.68 million, according to Statistics Korea. About 29.75 million are classed as economically active, meaning they are aged 15 or older and either employed or actively seeking work.

Using this correlation, the researchers calculated that an additional one million foreign graduates could raise gross domestic product by around 6 per cent, or about 145 trillion won (S$134 billion). If the current 1.35 million registered foreign residents grew to five million, the gain could reach 361 trillion won.

The urgency comes from a combination of a record-low birth rate and the world’s fastest rate of population ageing. Together, they are shrinking South Korea’s workforce at an unprecedented pace.

Yet the country has relatively few highly skilled foreign workers. Ministry of Justice data for 2023 shows that just 68,642 held professional work visas, such as the E-1 (professor) or E-7 (speciality occupation) visa. The Korean Educational Development Institute counted only 52,154 foreign graduate students enrolled in 2024. That means the pool of talent with master’s and doctorate degrees remains far below demand.

Immigration as solution to “ABCD” challenges

The KCCI describes overseas recruitment as a way to address what it calls the nation’s “ABCD” challenges: adapting to artificial intelligence (AI), reversing the low birth rate, improving competitiveness and boosting domestic demand.

Prof Kim said the value of attracting skilled foreigners goes beyond merely increasing headcount. Foreign workers also stimulate consumption, improve labour productivity, strengthen industrial competitiveness and help modernise the economy.

The report proposes creating cities designed for long-term settlement. These would offer visa incentives, tax breaks and strong education and healthcare services. Flexible regulation in designated zones would make social and economic integration easier.

Another recommendation is to attract advanced manufacturing plants in sectors like semiconductors and AI. The idea is to link corporate investment directly to talent recruitment, giving firms a steady supply of specialised workers while turning regions into industrial hubs.

A third strategy is to prepare overseas talent in advance. The KCCI suggests targeting students in countries such as Vietnam and Indonesia, where Korean culture has strong appeal. These students could be trained for Korean industries including shipbuilding, biotechnology and advanced manufacturing, with pathways for family settlement and long-term careers.

“In the age of AI, the global competition for talent is intensifying,” said KCCI’s industry innovation division head Lee Jong-myung. “It is time to build internationally competitive cities that help foreign professionals settle quickly and contribute to growth.” THE KOREA HERALD/ASIA NEWS NETWORK